There's been a notable change in appetite for Hanger, Inc. (NYSE:HNGR) shares in the week since its annual report, with the stock down 15% to US$18.60. It looks like a credible result overall - although revenues of US$1.1b were in line with what analysts predicted, Hanger surprised by delivering a statutory profit of US$0.72 per share, a notable 14% above expectations. Analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see analysts' latest (statutory) post-earnings forecasts for next year.
Following the latest results, Hanger's dual analysts are now forecasting revenues of US$1.14b in 2020. This would be a modest 3.7% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to soar 22% to US$0.90. Before this earnings report, analysts had been forecasting revenues of US$1.13b and earnings per share (EPS) of US$0.89 in 2020. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
There were no changes to revenue or earnings estimates or the price target of US$30.00, suggesting that the company has met expectations in its recent result.
Further, we can compare these estimates to past performance, and see how Hanger forecasts compare to the wider market's forecast performance. It's clear from the latest estimates that Hanger's rate of growth is expected to accelerate meaningfully, with forecast 3.7% revenue growth noticeably faster than its historical growth of 0.9%p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 6.7% per year. So it's clear that despite the acceleration in growth, Hanger is expected to grow meaningfully slower than the market average.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Hanger's revenues are expected to perform worse than the wider market. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn't be too quick to come to a conclusion on Hanger. Long-term earnings power is much more important than next year's profits. We have analyst estimates for Hanger going out as far as 2021, and you can see them free on our platform here.
You can also see whether Hanger is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
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